Our internal foreign aid program

As I looked at where the money is being spent in the part of the country pictured (the part I know best), there did not seem to be a lot of rhyme or reason between Congressional Districts as far as population or need. Is it random? Could it be (shock!!!) that where the money is spent depends on the party, power, and skill of the Congressperson from that district?

The other interesting thing about the graph is the summation of total spending $218.737 billion and the creation of 749,142 jobs. Did it occur to them that somebody might divide the first number by the second and come up with the number per job (slightly less than $300K). Did anything think of just paying workers $300K directly, and letting them stay home and read poetry?

Of course, I am outside my area of expertise here. Perhaps the main point that I can make is that it is really GREAT that the US government was so transparent as to put these maps up (and many more – go to the web site!), so that citizens (hopefully including more intelligent commentators than me) can give feedback. When will foreign aid spending have maps like this? I hear rumors the day may be coming…

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It seems to be correlated with state capitals. However, I remember hearing (a couple of months ago) that the information was coded poorly and that all the money supposedly destined for Harrisburg, for example, wasn’t actually spent in Central PA. If that’s true, then this isn’t an accurate representation of where the aid is being spent.

Stephen, good catch on state capitals, interesting to think of political reasons for that. Oh, and why am I not surprised the data may not be so accurate? We need people to watch the data that is used to watch the stimulus spending!

There are a lot of people who watch the data that is being used to watch stimulus spending, both internally in the government, and externally in various think tanks. For all the effort that people put into that, I wish there was more PR, supporting or deriding the projects, beyond a nerdy government site or wonky think-tankish sites.

Primary congressional districts are often determined based on the location of the project’s administrative office, regardless of where the project is being carried out.

And as for the “cost per job,” if you dig a little deeper and look through the list of projects funded by the American Recovery and Reinvestment Act, you will see a lot of them are major construction projects, which have a lot of materials costs. Job calculations are a) based on the number of hours worked in a quarter and funded directly under Recovery Act project, and doesn’t count some types of contracts or wider impact in the community and b) reported by the “Prime recipient” ie the organization that received the grant.

I hope this is helpful in your analysis of America’s internal aid project.

Georeferenced data, with interactive maps, will be released in September or October for active World Bank projects in the Africa and Latin America regions. Active African Development Bank projects for about 8 countries are also fully georeferenced and will be released soon. These posts have some info on what will be available:

I think a lot of the money would flow into state capitals because a lot of the ARRA money was dispensed to state agencies who are almost invariably located at the state capitals.

In terms of the $300,000 per worker, I would assume that number is not listing a “fiscal multiplier” of sorts.

By the way, I still find it funny that we are still debating whether stimulus created jobs or whatever and how successful it was. We actually could have known whether it was going to work immediately after it was passed. Since in New Keynesian models the way stimulus becomes effective is when the zero lower bound becomes binding, an autonomous increase in temporary government spending pushes up inflation expectations, pushes down the real rate, and increases output (normally the Fed would mitigate the inflation pressure by raising rates, but at the ZLB the Fed is suppose to welcome inflation). Of course, this leads to why the Fed wouldn’t just commit to future inflation – hence pushing up expectations – and save us the trouble of that big budget deficit. But anyway, if stimulus was going to work as New Keynesian models predict, then immediately after the bill was drafted and passed – we should have seen a inflation expectations grow, the exchange rate should have depreciated significantly, and stocks and commodities should have soared. Instead, we saw a pretty sad market response to the stimulus. So, unsurprisingly, not much really happened from it. Whether this is because the New Keynesian model has some internal flaw or because the package had a lot of contractionary tax cuts (if you explore the perverted logic, you are left to the conclusion that temporary tax cuts can be contractionary in the NK model when the zero lower bound is binding) or the fact that a lot of the stimulus was offset by state government spending contractions (since what matters is aggregate government spending) – we’ll never know. But we should have known it wouldn’t have worked really well given the market response. Again, it still baffles me why the Fed is just sitting around watching us suffer when the continue to be consistently far below their implicit core inflation target.

Ted, Whether the Stimulus is working as the grand utopian fix for all our economy’s ills, or if it is working in some areas through specific projects for particular people…sounds like a book Easterly would write

About Aid Watch

The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

"Conscience is the inner voice that warns us somebody may be looking." - H.L. Mencken